L&T: GMR, GVK road cancellations to have only minimal impact
Mumbai: Engineering and construction major Larsen & Tourbo (L&T) Thursday played down the impact of losing some orders following GMR Infra and GVK walking out of two road projects earlier this month, saying that its order pipeline will not be hit more than 10 to 11 percent.
It has been reported that L&T would lose orders worth over Rs 4,000 crore after infra major GMR and GVK decided to walk out of two road projects they won from the National Highways Authority of India (NHAI) earlier this month citing inordinate delays in getting clearances.
"We have had direct discussions with our clients and at the moment what we know from them that the orders are still there. These orders are at a very early stage and we have not done much of engineering. We believe clarity will come in the three to four weeks," L&T Managing Director and Chief Executive K Venkataramanan told reporters here.
"Meanwhile, we have a continuous order pipeline that is being looked at. But as of now, these old orders are on our books and we do not have direct communication from our clients," he said.
Early this month, GMR and GVK had pulled the plug on two high-profile road projects, collectively worth around Rs 10,700 crore.
The two projects constitute GMR's Rs 7,700-crore Kishangarh-Udaipur-Ahmedabad project in Gujarat, which it had won from the NHAI at an annual premium of Rs 636 crore, while the GVK project involved the Rs 3,000-crore Shivpuri-Dewas project in MP.
These companies cancelled their contract with the NHAI citing delays in getting forest and environmental clearances, a claim dismissed by the NHAI chairman R P Singh, who attributed the decision to the companies' inability to secure funding.
When asked whether these cancellations and slowing of orders would have any adverse impact on L&T's order book guidance, its CEO Venkataramanan said, "Other than these two orders that we have heard from the press and not from the customers, the stock of slow moving orders continue to be at 10 percent which we have been mentioning".
"If I add these Rs 4,000 crore orders to our current road orders, the quantum is hardly 11 percent of our Rs 1.6 trillion order book," Venkataramanan said.
He said the company is seeking to do around Rs 85,000 crore worth of orders, and hence orders worth Rs 4,000-crore do not constitute much.
Additionally, Venkataramanan said that the company still has orders worth around Rs 16,000 crore to be executed on the road sector, which gives the company a cushion to absorb the slow movement of orders.